Southern Sun (SSU) H2 2025 earnings summary

Executive summary

• Achieved record profits for FY2025, with income up 9% to ZAR 6.6 billion, driven by strong trading in the Western Cape and Gauteng, and successful hotel refurbishments, while Durban and Mozambique underperformed.

• EBITDA/EBITDAR grew 14% year-over-year to ZAR 2.2 billion, adjusted earnings rose 30%, and adjusted HEPS increased 34% to 75.6c, supported by prior share buybacks.

• Dividend doubled to ZAR 0.25 per share, now representing one-third of earnings, reflecting confidence in cash flows.

• Net debt reduced to ZAR 266 million, with strong liquidity (ZAR 396 million cash, ZAR 1.8 billion undrawn facilities) and leverage ratio at 0.1x.

• Major refurbishments in key hotels contributed to increased occupancy and rate growth.

Financial highlights

• Revenue up 9% year-over-year to ZAR 6.6 billion; rooms revenue up 10% to ZAR 4.4 billion; food and beverage up 6% to ZAR 1.6 billion.

• EBITDA/EBITDAR margin improved to 33% from 31%; operating profit increased 12% to ZAR 1.56 billion.

• Free cash flow of ZAR 950–952 million, stable despite higher tax and CapEx.

• Occupancy reached 60.8%, first time above 60% since 2019; average room rate up to ZAR 1,463; RevPar up to ZAR 890.

• Overheads well controlled, up 7% (mainly payroll and inflationary pressures).

Outlook and guidance

• Management expects further recovery in occupancy, targeting 63% if underperforming regions recover and Cape Town holds.

• Dividend payout ratio to remain at one-third of earnings; buybacks considered if share price remains below cost of debt.

• Maintenance CapEx guidance remains above ZAR 500 million annually, with flexibility to delay projects.

• No aggressive offshore expansion planned; focus remains on South Africa and select existing offshore assets.

• Tailwinds include softening inflation, suspension of load shedding, and potential visa regulation easing.